Coffee giant Starbucks' latest profit plunged nearly 70% of Japanese media: nothing to do with China

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Apple has previously blamed its earnings decline on China's economic slowdown, and whether Starbucks' profit decline is also due to the apathy of the Chinese market.

Starbucks has always been seen as a representative of companies that have been victimized in the Sino-US trade war.

According to US media reports, new competition and economic slowdown have not scared Starbucks away from the Chinese market.

"We are playing a long-term game," Kevin Johnson, CEO of Starbucks, said on an earnings call on Thursday. We are still optimistic about our path and future growth in China. "

The Nippon Keizai Shimbun reported on January 25, 2019 that according to the quarterly report released by the US coffee chain Starbucks on January 24, between October and December 2018, Starbucks' profit was 66% lower than that of the same period in 2017. less profit of $760 million.

Although it achieved a 9% increase in turnover by relying on more stores, it also cost a lot of money to re-integrate its internal business as Starbucks withdrew from the tea market. Europe, the Middle East and Africa dragged down Starbucks' fourth-quarter performance. In these areas, same-store sales fell 1% year-on-year, revenue also fell 1%, and operating income fell 17%.

Rapid growth has helped boost sales. Starbucks reported that store sales in China rose 1% year-on-year in the fourth quarter of last year, with most of the growth thanks to the opening of new stores. Starbucks now has about 3700 stores in 158cities in China, an increase of 18 per cent over the past year. In order to better compete in the region, Starbucks is also taking advantage of its partnership with Alibaba's Box Horse Xiansheng supermarket and digital platform and providing delivery services in more than 2000 stores in China.

According to previous forecasts, the turnover of Starbucks' existing stores will grow by 4%, and Starbucks has achieved it, but the growth of turnover of existing stores in the Chinese market has stopped at 1%.

China is Starbucks' fastest-growing major market, and Starbucks will still expand aggressively in China. Starbucks plans to expand the number of stores in China to 6000 by 2023, up from 3684 now.

At the same time, China also poses a unique risk for Starbucks: consumers may be reluctant to spend money on expensive coffee because coffee is still considered a luxury in the Chinese market, where coffee culture is just emerging. Starbucks' local competitors are also growing.

One of them is Luckin Coffee. Luckin Coffee opened about 2000 stores in China last year and plans to open another 4500 this year, surpassing Starbucks in number to become the largest coffee chain in China.

Starbucks says it is not too worried about new competition. "We respect all competitors," said John Culver, global president of Starbucks International and Channel Development. As people enter this market, they help bring the overall awareness of coffee consumption into the market. This is a positive thing. "

Although growth is now back on track in China and around the world, Starbucks still faces big challenges. Competition from boutique coffee shops in the third coffee wave continues, while outsiders such as McDonald's, KFC and Donndole are starting to attack Starbucks with cheaper coffee and denser stores. The current CEO Kevin Johnson earlier announced plans to slow the opening of 1000 new high-end selected stores around the world, focusing on the company's current solid performance, and announced two layoffs in September and November 2018 to optimize the company's structure.

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